Axis Capital Holdings Limited · NYSE:AXS
Axis Capital — Investor Day (May 2024)
66 slides from Axis Capital's investor day presentation, May 30, 2024
Slide 1: Specialty Solutions, Elevated
AXIS Specialty Solutions, Elevated May 30, 2024 AXIS
Slide 2: Safe Harbor Statement
Safe Harbor Statement CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Insurance Risk Credit and Market Risk • the cyclical nature of the insurance and reinsurance business • the inability to purchase reinsurance or collect amounts due to This document contains forward-looking statements within
Slide 3: Agenda
Agenda AXIS: Our aspiration, strategy, and commitments Vincent C. Tizzio, President and CEO Underwriting: Doubling down on our Specialty capabilities Daniel Draper, Chief Underwriting Officer 10-minute break North America: Expanding our Specialty franchise Michael McKenna, Head of North America Glob
Slide 4: AXIS: Our aspiration, strategy and commitments
AXIS: Our aspiration, strategy and commitments Vincent C. Tizzio President and CEO
Slide 5: AXIS aspiration
AXIS aspiration Be the leading Specialty underwriter, generating consistent top-quartile diluted book value per common share (“DBVPS”) growth for shareholders 5
Slide 6: Global Specialty underwriting franchise
Global Specialty underwriting franchise Our strategic focus is on Specialty products: Risk transfer that requires dedicated, tailored underwriting expertise delivered through differentiated distribution channels and customer profiles AXIS at a glance as of Q1 2024 Gross premiums written ("GPW"), las
Slide 7: Broad, diverse Specialty portfolio
Broad, diverse Specialty portfolio Insurance Total GPW by line of business, last 12 months1 Includes business written out of North America, primarily in Excess and Surplus and Wholesale, Financial Lines, Programs, and Credit, Surety Other2 multiline products for the Canadian markets & Political Risk
Slide 8: New chapter in our journey to become the leading Specialty underwriter
New chapter in our journey to become the leading Specialty underwriter Improved ways of Ambitious and Rebalanced Underwriting-led Strong, flexible operating and going clear strategy portfolio focused on company capital position supported by four core strengths in to market, enabled by with significa
Slide 9: Bold aspiration and clear strategy
Bold aspiration and clear strategy Be the leading Specialty underwriter, generating consistent top-quartile DBVPS growth for shareholders Strategic pillars We operate in We are rigorously attractive markets, We invest in building improving how we make decisive choices strong capabilities in We manag
Slide 10: Rebalanced portfolio
Rebalanced portfolio Enhanced focus on insurance, Opportunistically pursued Percent of total GPW attractive markets, GPW Reduced probable maximum losses ("PML")1 Insurance Reinsurance E&S Property Excess Casualty 100 year 20 year 10 year 24% CAGR $1,395M $1,042M 55% 73% $710M $741M $622M $475M $335M
Slide 11: Improved underwriting performance
Improved underwriting performance Consistently improving profitability Current Accident Year ("CAY") Combined ratio1 CAY loss ratio2 Expense ratio3 92% 90% 87% 87% 34% 33% 32% 33% Resulting in expanding returns Annualized operating ROACE Insurance 58% 58% 55% 54% 18% 11% 11% 100% 99% 9% 93% 96% 26%
Slide 12: Industry experiencing substantial shifts
Industry experiencing substantial shifts $150 billion Forecasted E&S market by 2030 Rising demand for complex, non- $35-70 billion Estimated global GPW (excluding China) associated traditional risk with low-emission physical assets by 2030 coverage 20% Cyber GPW compound annual growth rate $50-70 ("
Slide 13: Ideally positioned to seize on these opportunities
Ideally positioned to seize on these opportunities The global AXIS Specialty platform AXIS Insurance AXIS Reinsurance Industry shifts create (North America, Global Markets) major opportunities for Legal entity footprint providing access to all major Specialty markets carriers who can navigate the ne
Slide 14: Market opportunities + AXIS platform = Consistent growth prospects
Market opportunities + AXIS platform = Consistent growth prospects AXIS has headroom to optimize and selectively grow its franchise We will capture opportunities across 3 key growth levers 1 Capitalizing on favorable environment in core markets with strong price AXIS share Addressable market 2% US S
Slide 15: Major investments in talent to propel our strategy
Major investments in talent to propel our strategy Dynamic team to lead the AXIS journey Top Specialty underwriting talent Vincent C. Tizzio New additions to executive team since 2022 President and CEO Joined Jan 2022; appointed CEO May 2023 4 Underwriting teams added in the past 12 months: Conrad B
Slide 16: "How We Work" leverages our competitive platform
"How We Work" leverages our competitive platform How We Work program launched in 2023 to enhance how we operate and how we go to market Deliver efficiencies Simplify operating and capitalize on structures and productivity gains processes <11% Enhance ability to Increase agility Target G&A ratio by 2
Slide 17: Emphasis on generating shareholder value
Emphasis on generating shareholder value Fully aligned incentives between management and shareholders Compensation clearly tied to value creation Performance-based equity program based on 15% annual adjusted DBVPS growth and relative total shareholder returns (“rTSR“) Consistent capital returns Resp
Slide 18: Mid-teen diluted book value per share growth through the cycle
Mid-teen diluted book value per share growth through the cycle Key factors driving DBVPS Additional investment growth yield Robust Specialty underwriting enabling steady capital management and resilient loss ratios G&A ratio improvements Continued Well-positioned in growing Specialty DBVPS markets w
Slide 19: Key takeaways
Key takeaways Aspiration to be the leading Specialty underwriter, enabled by distinctive capabilities and global platform Clear strategy to deliver on this aspiration through profitable growth and consistency of execution, generating shareholder returns quarter after quarter Investments in transform
Slide 20: Underwriting: Doubling down on our Specialty capabilities
Underwriting: Doubling down on our Specialty capabilities Daniel Draper Group Chief Underwriting Officer
Slide 21: The office of the CUO
The office of the CUO Established to optimize returns on underwriting capital by creating an enterprise-wide framework to manage the AXIS portfolio across our businesses One AXIS One AXIS One AXIS Dual objectives: Optimized Portfolio Portfolio Strategy Governance Strategic allocation of Balanced por
Slide 22: Broad, diverse Specialty portfolio
Broad, diverse Specialty portfolio Insurance, last 12 months1 Within our 3 divisions, we compete in markets and segments where our distinctive underwriting acumen differentiates us North America Global Markets Credit, Surety & Renewable E&S Property Other3 Political Risk Energy Total GPW by line of
Slide 23: Granular approach to capital allocation and portfolio construction
Granular approach to capital allocation and portfolio construction Common assessment and ranking of Deployment of tools including all lines of business, based on market data, analytics, and AI, enabling attractiveness, return on capital, and our underwriting teams to volatility optimize risk selecti
Slide 24: Sophisticated cycle management capabilities
Sophisticated cycle management capabilities “One AXIS” approach to managing the cycle, enabled by granular risk selection, pricing, and underwriting risk management Cycle management components Underwriting Risk Appetite Framework Line Size Management Product Reviews Premium Adequacy & Portfolio Prof
Slide 25: Impact: Reducing line sizes and ensuring steady CAY loss ratios
Impact: Reducing line sizes and ensuring steady CAY loss ratios Evolution of policy size limits 2018 in key lines1 2023 Evolution of group CAY loss ratio CAT CAY loss ratio3 Ex-CAT CAY loss ratio3 Reported CAY loss ratios -75% 70.7% 75.4% 68.1% 64.6% 63.3% 9.0% 17.7%4 58.6% 7.5% 9.5% 7.8% 2.7% 61.7%
Slide 26: Impact: Reduced probable maximum losses and portfolio concentration
Impact: Reduced probable maximum losses and portfolio concentration Evolution of Property PML1 Property & Catastrophe AAL2 20yr 250yr share of AXIS portfolio3 Property & Catastrophe4 5yr 50yr Other lines 10yr 100yr $6.9B $6.9B $6.8B $7.7B $8.2B $8.4B $1.5B 24% 20% 20% 31% 29% 27% $1.0B 76% 80% 80% $
Slide 27: Property portfolio management
Property portfolio management Rapidly embracing analytics, innovation, and technology to improve Property Outcomes underwriting and pricing, manage aggregations, and drive efficiency (FY 2023 vs. 2020) DRIVING RATE ACROSS THE PORTFOLIO PML & MICROZONE CONTROLS +66% Rate index Growth in Property insu
Slide 28: Cyber portfolio management
Cyber portfolio management Rapidly embracing analytics, innovation and technology to improve Cyber Outcomes underwriting and pricing, manage aggregations and drive efficiency (2023 FY vs. 2020) DRIVING RATE ACROSS THE PORTFOLIO UNDERWRITING HYGIENE CONTROLS Rate index MONITOR BUSINESS MIX +50% Growt
Slide 29: Key takeaways
Key takeaways CUO’s core objective is to increase profitability while reducing volatility through an enterprise-wide framework for balanced portfolio management Established a highly granular approach to portfolio steering and a sophisticated set of cycle management capabilities that drives capital a
Slide 30: North America: Expanding our Specialty franchise
North America: Expanding our Specialty franchise Michael McKenna Head of North America
Slide 31: North America at a glance
North America at a glance Product mix, GPW, Distribution channel mix, GPW, last 12 months1 last 12 months1 E&S Carrier of the Year 20232 E&S Property, Primary Liability, Excess Liability Wholesale Top-15 Financial E&S carrier2 Lines and Other Liability 70% Top-10 carrier 63% with leading wholesale b
Slide 32: We participate in growing markets in North America
We participate in growing markets in North America, with opportunities to expand our presence Market Sizing US E&S market, DPW1 +21% CAGR ~2% $84B $73B AXIS $61B market share Market Key Products Dynamics $47B 2020 2021 2022 2023 US Specialty market, DPW2 Distribution New Revenue +10% CAGR Focus Pipe
Slide 33: Executing on our strategy in North America
Executing on our strategy in North America We operate in attractive markets, We invest in building strong We are rigorously improving how make decisive choices on where capabilities in underwriting, claims, we operate to become a more and how to compete, and nimbly and operations integrated, efficie
Slide 34: Our strategy enables continued GPW growth
Our strategy enables continued GPW growth Operating in attractive and growing Specialty markets +10% CAGR Deep, long-standing distribution Consistent relationships in wholesale and profitable other channels growth $2.7B1 Continued build-out of $2.5B1 differentiated underwriting $2.2B1 capabilities 2
Slide 35: How We Work program further accelerates and de-risks execution
How We Work program further accelerates and de-risks execution Objectives Impactful Outcomes Simplify operating Simplified operating model to support growth and structures and processes expense leverage Enhance ability to leverage data and Augmenting underwriting discretion with digital & analytics,
Slide 36: Key takeaways
Key takeaways Sustaining our underwriting discipline through the cycle by maintaining a flexible model that leverages our distribution capabilities Capitalizing on market opportunities to profitably grow where we have experience and relevance Relying on How We Work principles to enhance speed to mar
Slide 37: Global Markets: Strengthening our leading role in London and beyond
Global Markets: Strengthening our leading role in London and beyond Mark Gregory Head of Global Markets
Slide 38: Global Markets at a glance
Global Markets at a glance Diversified portfolio of Specialty products, GPW, Flexible platform, GPW, last 12 months1 last 12 months1 Specialist Insurer of the Year2 Company Market 90% Retention rate Marine & Aviation 53% Cyber Global Property $3.6 Professional Lines 51% $3.6 36% 49% 15% Construction
Slide 39: We capitalize on the market environment in global Specialty
We capitalize on the market ...through our flexible platform in environment in global Specialty... open and delegated markets London Market (Lloyd's & Company Market)1 Top-10 syndicate at Lloyd's, rated “Outperforming” +13% CAGR $72B Broad range of products with critical mass in $65B each; at the fo
Slide 40: We are highly responsive to changing market dynamics and emerging client needs
We are highly responsive to changing market dynamics and emerging client needs Example: Strengthening our role as a leading underwriter of Energy Transition risks through syndicate 2050 Leadership position in Energy market1 (Lloyd's & Company Market) Continued strong tailwinds +11% CAGR $2.3B Net ze
Slide 41: Executing on our strategy in Global Markets
Executing on our strategy in Global Markets We operate in attractive markets, We invest in building strong We are rigorously improving how make decisive choices on where capabilities in underwriting, claims, we operate to become a more and how to compete, and nimbly and operations integrated, effici
Slide 42: Our strategy enables continued GPW growth
Our strategy enables continued GPW growth Strong presence in fast-growing Specialty products within London Market +15% CAGR Consistent Deep, long-standing distribution profitable relationships and flexible platforms growth $3.4B1 Distinctive Specialty underwriting $3.1B1 across broad portfolio with
Slide 43: How We Work program reinforces Global Markets leadership position
How We Work program reinforces Global Markets leadership position Objectives Impactful outcomes Simplify operating Appointed global product underwriting heads to enable consistency structures and processes Deploying new Specialty products into US Retail channel Enhance ability to Facilitation of fas
Slide 44: Key takeaways
Key takeaways Strong track record of profitable growth with established leadership position and critical mass across key lines of business and distribution channels Continuous investments in top talent and capabilities to maintain leadership position and capture market opportunities through the cycl
Slide 45: AXIS Re: A strategic diversifier
AXIS Re: A strategic diversifier Ann Haugh CEO, AXIS Re
Slide 46: AXIS Re at a glance
AXIS Re at a glance >1100 Global footprint2, GPW, Treaties Participating across most attractive lines, GPW, last 12 months1 last 12 months1 >680 North America Clients Specialty Short tail risks Casualty3 A&H Marine & Aviation 65% Liability 66% 76% Credit Global&Property Surety $2.3 Professional Line
Slide 47: Specialty-focused product portfolio
Specialty-focused product portfolio Increased focus on Specialty lines1 Specialty 2 Casualty 2 Run-off lines3 Bottom-line focus driving improved underwriting quality through active portfolio management 2021 2022 2023 3% 14% Growth in Specialty lines and segments 25% where we have strong capabilities
Slide 48: Market opportunities remain abundant and our strong value proposition
Market opportunities remain ... and our strong value proposition abundant... and service model act as differentiators Specialty2 Global P&C Reinsurance Market1 Liability Broad and deep broker partnerships and client Property3 relationships; partners and clients value our ~$236B ~$244B differentiated
Slide 49: Executing on our strategy in AXIS Re
Executing on our strategy in AXIS Re We operate in attractive markets, We invest in building strong We are rigorously improving how make decisive choices on where and capabilities in underwriting, claims, we operate to become a more how to compete, and nimbly allocate and operations integrated, effi
Slide 50: How We Work program further enhanced AXIS Re capabilities
How We Work program further enhanced AXIS Re capabilities Objectives Impactful outcomes Simplify operating Global operating model to drive efficiencies and career path development structures and processes Elevation of claims service model Enhance ability to Implementation of new pricing approaches l
Slide 51: Key takeaways
Key takeaways Leveraging global platform to quickly seize on favorable Specialty reinsurance market opportunities and diversify our portfolio Steadfastly elevating our operations to drive efficiencies, enhance our client and broker experience, and continuously improve our highly integrated end-to-en
Slide 52: Financial Overview: Maximizing long-term value creation
Financial Overview: Maximizing long-term value creation Peter Vogt Chief Financial Officer
Slide 53: Mid-teen diluted book value per share growth through the cycle
Mid-teen diluted book value per share growth through the cycle Key factors driving DBVPS Additional investment growth yield Robust Specialty underwriting enabling steady capital management and resilient loss ratios G&A ratio improvements Continued Well-positioned in growing Specialty DBVPS markets w
Slide 54: G&A improvements through How We Work
G&A improvements through How We Work Next wave of initiatives to G&A expense ratio Inflight initiatives enhance productivity 13.5% 200+ Digitally enabled, end-to-end Initiatives inflight to improve process redesign across agility, operating structures, and Underwriting, Claims, and productivity ac
Slide 55: Conservative reserving philosophy
Conservative reserving philosophy Loss reserve setting affects every aspect of our business. Our approach is to reserve conservatively with prudent loss picks which inform portfolio management, capital allocation, and ultimately capital returns. Integrated approach to loss reserving embedded in our
Slide 56: Capital management aligned with strategy execution
Capital management aligned with strategy execution Robust "toolbox" for Capital deployed to advance strategic priorities generating and managing Cycle management & profitable growth capital Capital allocated to businesses providing attractive long-term returns Underwriting portfolio, e.g., Capital
Slide 57: Well-positioned portfolio driving strong investment returns
Well-positioned portfolio driving strong investment returns Investment portfolio as of 3/31/2024 Total cash and investments Forward momentum 9% Fixed maturities 4% Cash and equivalents1 Fixed maturity portfolio 4% Mortgage loans 7% Equity securities Significantly enhanced net investment income as
Slide 58: Elements to further accelerate value creation
Elements to further accelerate value creation Continued expense improvements through efficient and scalable operations Tailored investment strategy generating consistent income through the cycle Stable underwriting margins with low-volatility loss ratio Disciplined premium and underwriting profits S
Slide 59: Question & Answer Session
AXIS Specialty Solutions, Elevated Question & Answer Session AXIS
Slide 60: Appendix: Non-GAAP Financial Measures Reconciliations
Appendix: Non- GAAP Financial Measures Reconciliations 60
Slide 61: Non-GAAP Financial Measures Reconciliation (Unaudited)
Non-GAAP Financial Measures Reconciliation (Unaudited) Operating Income and Operating Return on Average Common Equity For the three months ended March 31, 2024, and years ended December 31, 2023, 2022, and 2021 1 Bermuda net deferred tax benefit due to the recognition of deferred tax assets net of d
Slide 62: Non-GAAP Financial Measures Reconciliation (Unaudited)
Non-GAAP Financial Measures Reconciliation (Unaudited) Current Accident Year Combined Ratio – Insurance Segment For the three months ended March 31, 2024, and years ended December 31, 2023, 2022, and 2021 62
Slide 63: Non-GAAP Financial Measures Reconciliation (Unaudited)
Non-GAAP Financial Measures Reconciliation (Unaudited) Current Accident Year Combined Ratio – Reinsurance Segment For the three months ended March 31, 2024, and years ended December 31, 2023, 2022, and 2021 63
Slide 64: Non-GAAP Financial Measures Reconciliation (Unaudited)
Non-GAAP Financial Measures Reconciliation (Unaudited) Current Accident Loss Ratio Excluding Reinsurance Catastrophe and Property For the years ended December 31, 2018 - 2023 64
Slide 65: Rationale for use of Non-GAAP Measures
Rationale for use of Non-GAAP Measures We present our results of operations in a way we believe will be meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considered non-GAAP fina
Slide 66: Rationale for use of Non-GAAP Measures
Rationale for use of Non-GAAP Measures We also present annualized operating ROACE, which is derived from the operating income (loss) measure and is reconciled to the most comparable GAAP financial measure, annualized return on average common equity ("ROACE"), in the 'Non-GAAP Financial Measures Reco